Montana Corporate Contributions Ruling: A Boon to Democrats?

On June 25, the U.S. Supreme Court overturned a Montana state law that banned corporate political expenditures. In a 5-4 decision, the court reaffirmed its Citizens United decision in American Tradition Partnership v. Bullock. Rather than hearing the case, though, the majority simply reversed a Montana Supreme Court ruling that had held the state law constitutional.

It was clear that the majority of U.S. Supreme Court justices did not find Montana’s case convincing at all. The entire decision overturning the law was less than one page in length. The key argument was articulated in just three sentences: “The question presented in this case is whether the holding of Citizens United applies to the Montana state law. There can be no serious doubt that it does. See U. S. Const., Art. VI, cl. 2. Montana’s arguments in support of the judgment below either were already rejected in Citizens United, or fail to meaningfully distinguish that case.”

So what does this mean for state races this November?

The ruling does clarify that unions and corporations can run independent expenditure ads for or against state and local candidates. This could have some significant impacts that I will discuss below, but first I wanted to address several areas where there will not be much of a change.

The ruling is likely to make it slightly easier for the national groups to engage in races around the country. DGA, RGA, RAGA, DAGA, DLCC and the RSLC have all been active in state races for years. But in cases where those groups are running independent expenditure advertisements, there should be less internal bookkeeping issues to make sure they were tracking where they were spending personal versus union/corporate dollars.

There also will not be much change for the SuperPACs and other independent expenditure groups that have relied on individuals for financing. If George Soros, the Koch brothers and other wealthy individuals wanted to run advertising, the First Amendment had protected that right prior to last month’s ruling.

“Issue advocacy” ads have been running for years as thinly-veiled campaign ads, except that they did not directly urge viewers/listeners/readers to vote for or against a candidate. Because of that distinction, these ads were often funded by corporate or union dollars, and the groups that funded them will now be able to say “Vote for Candidate X,” or more directly criticize a candidate in a negative ad.

Finally, this ruling is unlikely to have a major impact on the spending levels in the 28 states that still allow corporate and union contributions directly to campaigns. States like California and Illinois have fairly high limits, and some (like Virginia) have no limits on individual, corporate or union contributions directly to campaigns. Most contributions will continue to flow to those campaigns or to the campaign committees listed above that have already been involved in these states.

So, where will we likely see potential impacts on the ground?

I believe the biggest changes will be in state legislative races and local government elections. According to the National Institute on Money in State Politics, in nine states the average amount of money spent by winning candidates in state House elections fell short of $25,000. The lower dollar races provide opportunities for union/corporate money to have a big impact. Public sector unions could flood a few targeted districts with campaign commercials just before an election to promote candidates who will support their agenda and corporations could do the same for candidates they back.

This effect could be even more pronounced at the city and county level. Many city and county races outside major cities can be very low budget affairs and a few thousand dollars of union or corporate money could dominate those campaigns. Democrats could be the long term beneficiaries of this change.

As we have seen over the last few years, Democratic activists appear to have decided that urging boycotts against corporations contributing to Republican campaigns will discourage corporations from giving. There is no similar threat that will keep public sector unions from continuing to give. A boycott threat against a local hamburger chain may be enough to keep a franchisee from using company money to oppose a candidate that wants to ban all quick serve restaurants in a city. At the same time, a local teachers union would have no compunction against running ads for that candidate if he or she wants to raise property taxes to give teachers a pay raise.

While many activists on the left have been bemoaning the Citizens United and American Tradition Partnership decisions, unless businesses are willing to begin fighting back against these boycott and shareholder threats, the private sector is likely to be the big loser.

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Steve Arthur is Vice President at Stateside Associates directing the Retail Industry practice and co-leading the Attorneys General practice. He is a hands-on state government relations professional with expertise in strategic planning, issue management, direct lobbying and lobbyist management.